The World Trade Organisation to rule subsidies to Airbus

AMERICAN aircraft manufacturer Boeing says that with a ruling in the offing on a key World Trade Organisation case, it hopes European governments will not inflame the situation by providing launch aid for Airbus’ latest jet.

AMERICAN aircraft manufacturer Boeing says that with a ruling in the offing on a key World Trade Organisation case, it hopes European governments will not inflame the situation by providing launch aid for Airbus’ latest jet.

Wings for the new A350 long range jet will be made at Airbus’ plant at Broughton, Flintshire, and Airbus is looking for £700m repayable launch aid from the UK government towards the £9bn cost of developing the plane.

But an announcement on that may be delayed because a preliminary ruling is due at the end of August in a World Trade Organisation (WTO) case brought by the US against what it sees as illegal European Union launch aid for Airbus.

The ruling, to be followed about six months later by a decision in a countersuit brought by the EU over US support for Boeing airliners, would be a first attempt at resolving the long-running, multi-billion-pound transatlantic dispute.

The French and German governments have already said they are willing to given loans totalling just over £2bn for the A350 project and Britain and possibly Spain are expected to follow suit with announcements of hundreds of millions of pounds more in support.

The Welsh Assembly Government is giving a £28m grant to safeguard the jobs of 1,750 workers at Broughton who will work on carbon fibre wings for the A350 and other aircraft.

The wings will be built in factory costing £71m now being built and expected to be ready next year.

New US trade representative Ron Kirk has said Washington will launch another challenge at the Geneva-based WTO if European governments give financial support to the A350 project.

Chicago-based Boeing argues that the expanding industry, in which governments play a big role, needs clarification over what counts as illegal subsidies and what the rules of competitions are going to be.

And Ted Austell, Boeing vice-president for government operations, said: “We trust both governments will take the WTO decision on board, and we will see the end of aircraft subsidies.”

Mr Kirk and EU trade chief Catherine Ashton have met several times but, several years after the case was first lodged with the WTO, there seem little chance at this stage of settlement through negotiation rather than litigation.